Melrow Inc., a U.S. firm, suffers heavy losses and lays off many of its employees. As a measure to reduce its manufacturing costs, it shifts its production units to another country where inexpensive labor is available

In this scenario, Melrow Inc. is engaged in _____.
a. licensing

b. outsourcing
c. franchising
d. inshoring

ANSWER: b

In this scenario, Melrow Inc. cuts costs by shifting its production units to another country because of the inexpensive labor available there. Therefore, Melrow Inc. is said to be engaged in outsourcing. Outsourcing refers to sending U.S. jobs abroad.